Highlights of the day
We are recommending a Switch from IOI Corp to KL Kepong. Latest moves by Indonesia have negative implications for downstream operations, offset by the positive impact of strong CPO prices on upstream operations. KLK benefits more than IOI from higher CPO prices given IOI’s more significant downstream operations. Furthermore, KLK has just announced the disposal of Crabtree & Evelyn for US$155m which is another positive.
§ Gamuda (Company Update): MRT tunneling job in the bag (Upgrade from SELL to HOLD; TP: RM3.53) [download report]
After nearly 2 years since Gamuda and MMC Bhd joined forces to moot the Klang Valley My Rapid Transit (MRT) project to the Government in mid-2010, MRT Co yesterday announced that Gamuda-MMC joint venture (JV) won the tunneling package of the Sungai Buloh – Kajang (SBK) line valued at RM8.2bn, beating 4 other prequalified contractors. While we have factored the tunneling job award in our earnings forecast, the timing of the award was earlier than our and market expectation of end-April. Given that Vietnam has eased monetary policy slightly and take-up rates have improved at the group’s Gamuda City (Hanoi) and Celadon City (HCMC) property developments, we turn more sanguine on prospects for Gamuda’s property segment. Upgrade from SELL to HOLD, TP RM3.53 based on sum-of-parts.
Other reports
§ Kuala Lumpur Kepong (Quick Bits): Disposal of Crabtree & Evelyn (HOLD, TP: RM24.95) [download report]
Other Malaysian news
§ Banking: New Indonesian ruling to hit banks
§ Maybank: Plans branch in Myanmar
§ Sime Darby: To expand healthcare business in Indonesia
§ CIMB: RBS closing down some units in Asia
§ Cypark Resources: Aims for RM45m revenue from solar power
§ Automotive: February vehicle sales jumped 9% y-o-y
§ Plantation: Centre for oil palm biomass
Global news
§ US: Housing heals as starts near three-year high
§ US: Japan, 10 EU nations exempted from new Iran oil sanctions
§ Europe: Greece receives first slice of bailout
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